Well, it most definately based off of a japanese water dragon (can't remember which). But, the pokemon in terms of types, isn't a dragon type. He is a flying (I still don't know how, again probably dragon look) and water type. Now you can tell your brother that you were right! :D

Plus, the reason he's Water/Flying is because the only Dragon move at that time during the the development of Red and Green was Dragon Rage, only doing 40 damage. So Gyarados as a Water/Dragon type had no weakness since Water resists Ice. For some reason, Nintendo decided to have it be Water/Flying to fix this other than either making a new Dragon move or make Ice beat Water (Two logical things to do)

Despite in everyway looking like a Dragon, it isn't! It is Water and Flying, but can only learn 1 flying move! Bounce by the move tutor! Magikarp can even learn it! It should be Water and Dragon with Levitate!